Africa

As Western nations continue their push to reduce their over-reliance on China for their critical mineral needs, some of the key players, including the United States and the European Union, have increasingly turned their eyes on Africa, a continent that is home to an estimated 20% of the metals and minerals required in EV battery technology, and a vast array of other critical minerals as well.

With the continent’s “geopolitical stock” on the rise, observers see African countries becoming more assertive in negotiating mineral deals with external actors, and resorting to resource nationalism “in some economies where we see an insistence on local processing, more stringent local content requirements and generally attempts to integrate these critical mineral supply chains with a broad drive for industrialization.”

Most recently, Kenya is making headlines with legislation pending that would establish a Mining Regulatory Authority to replace the current Mining Rights Board, which would, unlike its predecessor which was an advisory body, “control the exploration, extraction, production, processing, refining, transportation, storage exportation, importation and sale of minerals.”

Kenya is home to significant deposits of copper, graphite, manganese, nickel and iron ore, demand scenarios for which are surging.

With the coronavirus pandemic spotlighting supply chain security issues for critical minerals and against the backdrop of ever-increasing demand, export controls have gained in popularity as a policy tool.

Earlier this summer, reports of India considering an export ban on four key metals – lithium, beryllium, niobium, and tantalum — made headlines on the heels of China announcing export restrictions on gallium and germanium, followed by controls on certain drones and drone-related equipment.

Zimbabwe banned lithium ore exports last December, and Namibia recently banned the export of unprocessed lithium and other critical minerals.

All these announcements tie into a larger trend, which has been noticeable particularly in Latin America, a region with a historic penchant for nationalism, but also elsewhere.

ARPN has featured recent nationalist moves in Chile, Mexico and Bolivia, as well as in Myanmar, Indonesia, and China, and has showcased that even in the Western world, government involvement in the critical minerals sector is on the rise.

Some argue that rather than seeing emerging resource nationalism as a cause for concern, we should embrace it and understand it as an opportunity as “raw material export bans would encourage the construction of processing facilities in producer countries, allow them to claim a larger share of the value chain, (…) encourage the global dispersion of processing capacity that is today dangerously concentrated in China,” and the U.S. could harness this development via an expansion of its friend-shoring network.

Opportunity or threat – resource nationalism is increasingly becoming a policy tool the U.S. and our allies will have to factor into our efforts to decouple from adversary nations, i.e. China. In the process, as ARPN previously outlined, we will have to carefully balance domestic and global policy approaches — as well as public and private sector roles with economic and security concerns to reflect the geopolitical realities of our times.

And, as followers of ARPN well know, this can be best achieved within the context of a comprehensive all-of-the-above approach that focuses on domestic resource development where possible and leverages partnerships where needed.

 

Against the backdrop of surging demand for critical minerals and mounting geopolitical pressures, countries all over the world have stepped up their involvement in the critical minerals sector as the green energy transition charges on.

Followers of ARPN are aware of rising resource nationalism in Latin and South America, parts of Asia, and now Africa (see our most recent coverage of the issue here).  While some of these developments can be chalked up to a historically penchant for resource nationalism, more recently, government involvement in the critical minerals sector is on the rise even in the Western world.

As ARPN outlined earlier, while modern Western democracies are typically hesitant to embrace more state intervention in the critical minerals sector, many believe that in order to succeed, the United States and its allies need to learn “how to stomach more state intervention [themselves].” 

While state involvement has taken different forms depending on the geographical region, type of government and prevailing political leanings in a given country, a general trend towards more government intervention in this field cannot be dismissed, prompting PHP Group Ltd. Chief Executive Officer Mike Henry to warn that some of these efforts could backfire, and in fact undermine the global push towards net zero carbon emissions.

Speaking at an industry conference in Brisbane, Australia, he told attendees that it was “‘understandable’ that nations were scrambling to secure domestic supply of the metals needed in renewable energy and electric vehicles, but warned against an excessively domestic focus and over-reliance on the ‘sugar hit’ of state-provided subsidies,” as Yahoo Finance reports.

Said Henry:

“Governments striving to secure their own critical mineral supplies must ensure they don’t undermine the outcome the world needs to achieve – where in fact a combination of pragmatic international cooperation and competition can jointly accelerate the energy transition,” 

Speaking specifically in reference to Australia’s just-released critical minerals strategy, which had left some disappointed as they had hoped for more subsidies, permitting reforms and additions to the country’s critical minerals list, he added:

“There’s a big movement underway in the U.S. right now towards permitting reform. Australia needs to do that,” and “[w]hat governments here – federal and state – should focus on are those things within their control to make investment fundamentally more attractive,” i.e. focus on better productivity and fiscal settings.

Henry’s comments should give policy stakeholders pause as they rush towards protectionism.

For a prudent all-of-the-above mineral resource policy to succeed, governments should avoid a heavy-handed approach and rather focus on providing well-structured frameworks conducive to unleashing their countries’ mineral potential and securing critical mineral supply chains without stifling the progress that stems from market innovation.

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